Microsoft, meanwhile, sees some slowdown as it falls behind Sony, Nintendo in sales

The NPD Group, Inc. -- a top market research firm -- has released its latest console sales report for the month of May 2014. With the exception of one small surprise (more on that in a bit), the message is the same -- Sony Corp.'s (TYO:6758) PlayStation 4 continues to dominate sales while Microsoft Corp.'s (MSFT) Xbox One remains a feisty, but struggling challenger.

I. Nintendo, Sony Win Big as Microsoft Struggles

The company's press release did not contain specifics on how many units each company sold, but it clearly indicated that Sony's console continued to dominate sales for a fifth straight month.

The last year has been a rocky one for Nintendo, which suffered largely due to its slow response at publishing new titles in its most popular franchises, like Kirby, Mario, Mario Kart, Smash Bros., Zelda, and Donkey Kong. It has been forced to cut its forecasts multiple times and saw sales drop early this year. Now its looking reinvigorated.

Due to that, while Sony held the sales crown in May, Nintendo might be the biggest winner of last month for breaking out of its nearly year long slump. Its return to growth was driven -- by its own accounting, even -- by the much anticipated release of Mario Kart 8. Mario Kart 8 sold roughly 1.2 million copies, good enough for second place in the NPD Group's May 2014 top selling video games list. The NPD Group report that many of those sales have come from the bundled copy, helping to drive Wii U console sales back to growth, as well.

Mario Kart 8 has been the fastest selling Wii U title in the console's young history. It was in third place in U.S. sales (versus second globally), showing gains in a market where Nintendo struggled throughout much of late 2013 and early 2014.

Nintendo's 3DS title Kirby:Triple Deluxe also performed admirably, earning ninth place on the list. According to the NPD Group, the Nintendo 3DS outsold the Xbox One (let that one sink in, for a moment), earning the ranking of second best selling system for the month (behind only the PS4).

The best-selling game in May was Watchdogs, the new techno-thriller from France's Ubisoft Entertainment SA (EPA:UBI). It was a relatively disappointing month for Microsoft in terms of content sales. After Titanfall scored the top spot in sales last month, this month the Electronic Arts, Inc. (EA) title plummeted to eighth place in sales, behind newer releases. Sony, meanwhile, scored a surprise hit with its exclusive MLB 14: The Show title, which launched for the PlayStation 4 (PS4), PlayStation 3 (PS3), and PlayStation Vita (PSV).

Speaking of the PlayStation Vita, Sony's portable -- while outsold by Nintendo's 3DS -- saw some progress of its own. A Borderlands 2 PSV bundle has sold well. The bundle introduced the American market's first major revision of the handheld.

II. A New Gaming Golden Age

Overall hardware sales rose to $187M USD for the month, up a whopping 95 percent from May 2013 ($96M USD). Driven by 15 percent growth in video game point and subscription cards, interactive gaming toys, and gamepads, video game peripherals and accessories saw a modest 8 percent sales rise.

Game sales were also golden in May. Downloadable content on consoles, smartphone games, and social network gaming continues to be a massive lucrative, but poorly understood channels. In-game microtransactions, subscriptions, mobile apps, and social network game spending totaled $787M USD (est.) for the month of May.

That's well ahead of the $274M USD in software sales that the console and portable market saw (up 57 percent). PC games, meanwhile sold an estimated $10M USD for the month. Consoles and portables also saw $124M USD (est.) in rental and used game sales.

Watchdogs was not only the top-selling game for May, it also drove Ubisoft past rival EA in total sales.

In total, the NPD group estimates consumers globally may have spent nearly $1.5B USD on the gaming industry's wares.

The last time overall new physical channel growth saw a month-over-month increase of this magnitude was June 2008, with a 53 percent increase... May 2014 marked the highest selling May data month for video game point and subscription cards on record.

As seen in prior months, the lift in hardware sales was driven by console hardware, which increased 137 percent in May 2014 (vs. May 2013). While much of May 2014's hardware growth was due to Xbox One and PS4, there was also year-over-year growth for the Wii U, and PS Vita.

Collectively, May 2014 launches sold 800 percent more in dollar sales than May 2013 launches did their respective launch months. New launches represented 50 percent of dollar sales this month, which compared to only 9 percent for new launches in May 2013.

Ubisoft may not exactly be beloved by gamers as it at times is at odds with its audience, but many gamers would be pleased to know that on the success of Watchdogs, Ubisoft is estimated to have deposed EA as the world's biggest gamemaker, in the month of May. (EA is regularly rated the "worst company" in regards to how it treats consumers.)

III. Sony -- PS4 is the "Leading Next Gen Console"

Looking ahead, June should bring more glad tidings for the gaming industry.

Sony released a cheery statement on the NPD numbers. Senior Vice President of PlayStation Brand Marketing Guy Longworth commented:

PlayStation continues to be the best place to play for innovative IP, as PS4 was the preferred platform for May’s biggest releases, including Watch Dogs and Wolfenstein: The New Order, and held four of the top five spots for next gen software sales. PS4 is the leading next-gen platform for sports, highlighted in May by the best-selling sports game, MLB 14: The Show.

Microsoft, after releasing comments emphasizing the positives on the last two months' NPD reports (where it got beat, but still one in some regards, such as with Titanfall's strong sales) was uncharacteristically silent, and has yet to release a comment on Xbox Wire. It's unclear whether Microsoft will bother to say anything, given that it's virtually impossible to spin this month's sales figures in its favor.

A new Kinect-less SKU could boost the Xbox One in June.

The Xbox One maker is likely looking forward to next month's numbers. It's hoping that the new cheaper Kinect-less $399 Xbox One SKU, will finally manage to stem the tide of Sony's victory march. If it can not, we're likely witnessing the two console giants reverse their roles of last generation, when Sony saw slow sales of the unprofitable PS3 and Microsoft saw booming sales of its Xbox 360.

However, it's a bit premature to come to such conclusions. Holiday 2014 will likely decided decisively the winner(s) and loser(s) of this generation of consoles. For now, though, anything could happen.

Loads of developers are certainly not bothered too much about optimizing for the different platforms. This hurts everywhere and when coupled them going for the lowest common then it hurts the PS4 (and the PC's for those games that are not console only).

I have a foot in both the console and PC world and whenever a game is on both console and PC I prefer the later (cheaper, mods, higher resolution, keyboard+mouse...). Some games like say the Far Cry series have done a good job taking advantage of the more powerful PC's, while others go so far has carrying over their dumbed-down GUI to the PC :-(